Exhibit 10.3
Spitz, Inc.
Xxxxx Xxx
X.X. Xxx 000
Xxxxxx Xxxx, XX 00000
September 1, 2002
Xx. Xxxx X. Xxxxxx
Xxxxx, Incorporated
U.S. Xxxxx Xxx
Xxxxxx Xxxx, XX 00000
Dear Xx. Xxxxxx:
This letter agreement will confirm the understanding arrived at between
us with respect to your continued employment with Spitz, Incorporated ("Spitz").
1. DUTIES.
(a) During the Term (defined below), you shall be employed from time to time as
Executive Vice President, Chief Financial Officer and Secretary of Spitz and in
such other executive capacity or capacities as the Board of Directors of Spitz
shall designate, subject to the direction of the Board of Directors and the
Chief Executive Officer of Spitz.
(b) In addition, if and to the extent requested by either Spitz and/or
Transnational Industries, Inc., Spitz's parent corporation ("Transnational"),
you shall, without additional compensation, serve as an officer of
Transnational, a director of Transnational and/or a director of Spitz.
Currently, you hold the positions of Executive Vice President, Chief Financial
Officer and Secretary of Transnational.
2. TERM. The term of your employment under this Agreement (the "Term") will
begin on the date hereof and end on the second anniversary hereof, unless
extended or earlier terminated pursuant to the terms and conditions set forth
herein. On the second anniversary hereof, and on each anniversary thereof, the
term hereof shall automatically be extended for an additional one year term
unless either (a) the term hereof shall have been previously terminated pursuant
to paragraph 7, or (b) either party gives written notice to the other of its
desire to terminate this Agreement by April 1st of such year (e.g., to terminate
your employment on the second anniversary hereof, notice of non-renewal would
have to be given by April 1, 2004).
3. COMPENSATION.
(a) Salary. Your salary during the Term shall be paid at a rate of $118,000 per
annum and this salary shall be paid to you not less often than monthly. Your
salary may be increased from time to time in the sole discretion of Spitz's
Board of Directors.
(b) Bonus. In addition to the salary set forth in subparagraph (a) above, during
the Term you shall be eligible to receive a bonus in the discretion of Spitz's
Board of Directors which is in the sole discretion of such board.
4. REIMBURSEMENT OF EXPENSES. In addition to salary, Spitz will pay or reimburse
you for all reasonable expenses incurred during the Term in connection with the
business of Spitz, Transnational and their respective subsidiaries and
affiliates upon presentation of appropriate documentation evidencing such
expenses. In addition, you shall continue to receive reimbursement for your
educational costs in maintaining your certified public accounting license as has
heretofore been provided.
5. EXTENT OF SERVICES.
(a) You shall devote substantially all of your working time and attention and
your best efforts to the business and affairs of Spitz and Transnational.
(b) You shall not undertake employment with, or actively participate in, the
conduct of the business affairs of any other person, corporation, or other
entity.
(c) You shall not be precluded from having or making general personal
investments which do not involve your regular active participation in the
affairs of the entities in which you so invest, but you shall not have any
substantial investment in any activity which is directly competitive with any
business then carried on by Spitz or by any company directly or indirectly
controlled by, or controlling, or under common control with, Spitz.
6. OTHER BENEFITS. During the Term, you shall be included as a full-time
employee in all pension, life and health insurance and profit sharing, bonus,
stock option and stock purchase plans, and other plans and benefits (including
without limitation eligibility for paid vacations) sponsored by Spitz for
executives or employees generally, to the extent provided by the terms of such
plans or benefit programs.
7. TERMINATION OF EMPLOYMENT.
(a) Termination by You or by Spitz. Spitz may terminate your employment at any
time upon ten days' written notice to you. You may terminate your employment
upon ninety days' written notice to the members of the Board of Directors of
Spitz; provided, however, that you may terminate your employment upon thirty,
rather than ninety, days' written notice so long as you agree in writing to
provide up to eight hours a week of unpaid consulting services outside of normal
business hours for an additional eight week period after leaving Spitz. In the
event your employment is so terminated (for reasons other than your permanent
disability or death which are covered in paragraph 8 below), Spitz shall pay to
you in a single lump sum payment within ten days of such termination any accrued
but unpaid salary through the date of termination and/or any awarded but unpaid
bonus, including, if Spitz pays salary in respect of accrued but unused vacation
or sick days upon termination, such salary in respect of accrued but unused
vacation or sick days.
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If you terminate your employment for Good Reason or if Spitz terminates
your employment with Spitz other than for Cause, you will also be entitled to
the benefits set forth in subparagraph 7(b), below.
(b) Termination by You for Good Reason or by Spitz other than for Cause. If your
employment with Spitz is terminated by you for Good Reason or by Spitz other
than for Cause, you shall receive the following benefits, in addition to the
payment set forth in subparagraph 7(a), within ten days after the effective date
of such termination:
(i) a lump-sum payment equal to one times your annual
salary (or, if your employment is so terminated within one
year of the date hereof, the product of your annual salary
multiplied by the number of years (expressed as a fraction)
remaining in your initial two year term), at the rate of
salary in effect immediately prior to the effective date of
such termination; and
(ii) life, disability, dental, accident, group health
and similar insurance benefits for one year from the effective
date of such termination, which benefits shall be
substantially similar to those that you would receive under
Spitz's plans therefor as in effect from time to time, to the
extent that you would be covered by such plans had you
remained employed by Spitz during such one year period;
provided, however, that such insurance benefits shall cease
if, and to the extent that, such coverage is provided by
another employer.
For purposes of this paragraph 7, notification by Spitz that it elects not to
renew the term hereof for an additional one year period shall be deemed to be a
termination by Spitz and, if such termination is other than for Cause, shall
entitle you to the payment set forth in this subparagraph 7(b).
(c) Cause Defined. Termination by Spitz of your employment for "Cause" shall
mean termination upon (i) (A) the gross negligence by you in the performance of
your duties, (B) your willful insubordination to directions given to you by
Spitz's Board of Directors and/or Chief Executive Officer, and/or (C) your
continued failure to perform substantially your duties with the Company (other
than any such failure resulting from your incapacity due to physical or mental
illness), in the case of any of (A), (B) or (C) above, after a notice of such
conduct is delivered to you by the Board of Directors of Spitz which
specifically identifies the manner in which the Board believes that you have
been grossly negligent or insubordinate or have not substantially performed your
duties, or (ii) the willful engaging by you in conduct which is materially and
demonstrably injurious to the Company, or (iii) the commission by you of a
felony. For purposes of this subparagraph 7(c), no act, or failure to act, on
your part shall be considered "willful" unless done, or omitted to be done, by
you in bad faith and without reasonable belief that your action or omission was
in the best interest of Spitz. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
the entire membership of Spitz's Board of Directors at a meeting of such Board
called and held for that purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
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finding that in the good faith opinion of the Board you were guilty of the
conduct set forth in this subparagraph 7(c) and specifying the particulars
thereof in detail.
(d) Good Reason Defined. Termination by you of your employment for "Good Reason"
shall mean termination by you (i) based on the failure by Spitz to observe or
comply with any of the material provisions of this Agreement, if such failure
has not been cured within thirty days after written notice thereof has been
given by you to the Board of Directors of Spitz, or (ii) after a "Specified
Change in Control." For purposes hereof, the term "Change in Control" shall mean
(i) a change within a twelve month period of a majority of the directors of
Transnational, or (ii) if a single person or entity, or a related group of
persons or entities, acquires 50% or more of the then outstanding voting stock
of either Transnational or Spitz, or (iii) any sale of all or substantially all
of Spitz's assets, or (iv) any merger or consolidation of Spitz or Transnational
in which the shareholder(s) of either such entity immediately prior to such
merger or consolidation do not, immediately subsequent to such merger or
consolidation, own a majority of the equity of such entity, and a "Specified
Change of Control" shall mean the occurrence of any of the following events
within eighteen months of the occurrence of a Change in Control: (x) the
relocation of your principal office to a site more than twenty (20) miles from
both its current site and Center City, Philadelphia, Pennsylvania; (y) the
material diminution of your duties and/or responsibilities for Spitz and its
business; or (z) in the event this contract is assigned to and assumed by
another entity in connection with an event constituting a Change in Control, the
failure of such successor to acknowledge to you in writing within 15 days of
such assumption, its assumption of this Agreement.
(e) The Term shall end on the effective date of your termination of employment
regardless of the reason therefor.
8. DISABILITY OR DEATH.
(a) Payments Continued. If you should suffer a permanent disability Spitz may
terminate your employment under this Agreement upon ten (10) days written notice
to you. In the event of a termination of your employment as a result of your
permanent disability, you shall receive the payments set forth in paragraph
7(a).
(b) Permanent Disability Defined. A permanent disability shall be deemed to have
occurred only when you have been unable to perform your customary duties by
reason of physical or mental disability for a period of more than three (3)
consecutive months, or for more than six (6) months during a period of twelve
(12) consecutive months. Any disability other than a permanent disability shall
not result in any reduction of salary or benefits.
9. RESTRICTIVE COVENANT.
(a) You acknowledge that the operations of Spitz are intended to be worldwide in
scope. During the Term and for a period of one year after the termination of
your employment under this Agreement, you will not at any time or at any place,
directly or indirectly, own, manage, operate, control, be employed by,
participate in or be connected in any manner with the ownership, management,
operation or control of any business competitive with the business conducted by
Spitz or Transnational (but, in the case of businesses conducted by
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Transnational and not by Spitz, only in the event that the Employee has assisted
or worked on such businesses), without the consent of Spitz, which consent will
not be unreasonably withheld. The phrase "business conducted by Spitz or
Transnational" used in the immediately preceding sentence of this paragraph 9
shall mean the business conducted by either Spitz and/or Transnational at any
time during your employment hereunder, to the extent that such business is
actually conducted at the time that or after you cease to be employed hereunder.
(b) You acknowledge that any remedy at law for breach of this paragraph 9 would
be inadequate and Transnational and Spitz shall be entitled to injunctive relief
in the event of any such breach.
10. TAXES. Notwithstanding anything in this Agreement to the contrary, if any of
the payments provided for in this Agreement, together with any other payments
which you have the right to receive from Spitz or any corporation which is a
member of an "affiliated group" (as defined in Section 1504(a) of the Internal
Revenue Code of 1986, as amended (the "Code") without regard to Section 1504(b)
of the Code) of which Spitz is a member, would constitute a "parachute payment"
(as defined in Section 280G(b)(2) of the Code), the payments pursuant to this
Agreement shall be reduced (reducing first the payments under subparagraph
7(b)(i)) to the largest amount as will result in no portion of such payments
being subject to the excise tax imposed by Section 4999 of the Code. Any
determination as to whether any reduction in the payments under this Agreement
pursuant to this proviso is necessary shall be made by Spitz in good faith,
after consultation with its accountants.
11. ARBITRATION. Any controversy or claim arising out of or relating to this
Agreement or the breach or asserted breach thereof, other than breaches of
paragraph 9 above, shall be settled by arbitration to be held in Philadelphia,
Pennsylvania by the American Arbitration Association in accordance with its
National Rules for the Resolution of Employment Disputes and judgment upon the
award rendered may be entered by the arbitrator(s) in any court having
jurisdiction thereof. In any such arbitration, the costs of the arbitrator will
be shared equally by you and Spitz and both you and Spitz will be responsible
for your own attorney's fees and expenses. 12. ASSIGNMENT. Spitz shall not
assign its rights or obligations under this Agreement except as part of a sale
or transfer of all or substantially all of its assets. The rights and
obligations of Spitz under this Agreement shall inure to the benefit of, and
shall be binding upon, the successors and assigns of Spitz.
13. SEVERABILITY. It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular provision of this Agreement shall be
determined to be invalid, prohibited or unenforceable for any reason, such
provision, as to such determination, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction. Notwithstanding the foregoing, if such
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provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
14. NON-ASSIGNABILITY. Your rights and benefits hereunder are personal to you
and shall not be alienated, voluntarily or involuntarily, assigned or
transferred.
15. ENTIRE AGREEMENT. This Agreement contains your entire employment agreement
and supersedes all prior written and oral agreements, including, without
limitation, the Letter Agreement by and between you and Spitz, dated May 1,
1995. It may not be changed orally but only by an agreement in writing signed by
the party against whom enforcement of any waiver, change, modification,
extension or deletion is sought.
16. HEADINGS. The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
17. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
18. WITHHOLDING. The Company may withhold from any compensation payable under
this Agreement all federal, state, city and other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
19. PENNSYLVANIA LAW TO GOVERN. This Agreement shall be governed by, construed
and enforced according to the domestic laws of the State of Pennsylvania without
giving effect to the principles of conflict of laws thereof.
Very truly yours,
SPITZ, INCORPORATED
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx, Chairman
AGREED TO AND ACCEPTED:
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
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